The oil crises of the 1970s sent the U.S. scrambling for home-grown energy and innovative replacements for foreign oil. But when oil prices dropped in the `80s, much of that support vanished. The result: The U.S. is just as reliant on imported oil today.

We’re at another turning point in energy innovation right now, and we must make sure we don’t lose momentum again, members of the Obama administration told Congress in House and Senate hearings today.

That means investing smartly in a diverse energy portfolio.

Interior Secretary Ken Salazar waved the flag for renewable energy and wind power, announcing in Massachusetts this afternoon that he had approved the controversial Cape Wind project, a 130-turbine wind farm planned for Nantucket Sound. “With this decision, we are beginning a new direction in our Nation’s energy future," he declared.

On Capitol Hill, Environmental Protection Agency Administrator Lisa Jackson talked about the importance of efficient vehicles and preserving the newly approved tailpipe emissions standards, and Energy Secretary Steven Chu discussed nuclear power, disruptive technologies, biofuels and the importance of a price on carbon to spur innovation.

Encouraging greater energy efficiency in homes, buildings and cars, reinvigorating the U.S. nuclear industry, and investing in developing cleaner technologies, such as carbon capture and storage, renewable energy and advanced biofuels, are all part of the equation, Chu told the Senate Appropriations Subcommittee on Energy and Water Development.

“All these efforts will be vital to our energy future, but even these steps will not be enough in the end. We need to put a long-term cap on carbon that ratchets down over time. Only a cap on carbon will give industries the certainty they need” to invest in cleaner technologies. he said.

Sustained Federal Support is Vital

Unlike the relatively short-term oil shocks of the ‘70s and early ‘80s, Chu see the continuing rise of developing economies, competition to lead the clean energy marketplace and global concerns about carbon emissions serving as long-term drivers for this new push toward clean energy development.

That’s important, because a federal commitment to sustained support, rather than on-again, off-again subsidies, will give innovators and private investors the confidence they need to move forward, he said. And that sort of private investment will be the key to the future.

The Department of Energy is currently working on a detailed roadmap of the technologies it sees coming to the forefront, including their anticipated costs and time lines for development, Chu said. Renewable energy, for example, will take decades to expand, in part because the nation needs to build up its transmissions systems to handle variable sources, he said.

“It isn’t one thing that will solve our problems,” Chu said. “We have still abundant sources of natural gas, we have oil, we have great agricultural resources that can be used. … We anticipate a renaissance in nuclear technology. We anticipate solar will get better and better.”

Federal research and development is also delving into the more futuristic, potentially disruptive technologies, such as creating fuel from solar energy.

Developing carbon capture and storage and similar technologies to keep coal viable in a carbon-constrained future is also vital, Chu said. He said he was working with scientists in China and Europe to co-invest in pilot projects to test some of these technologies in a way that everyone learns from the results.

“China and India are not going to turn their backs on coal, so we have to develop the technologies. And the United States, quite frankly, is not going to turn its back on coal, as well,” he said.

Chu has also been a strong proponent of nuclear power, particularly developing small, modular reactors that wouldn’t overwhelm smaller transmissions systems and with which the U.S. could become the global technological leader. Two projects are ready to go and both show promise, and a third is waiting in the wings, but the budget is insufficient to support them all, he said. Sen. Mary Landrieu (D-La.) suggested the Appropriations Committee members look seriously at adding $50 million to the budget to leverage those projects under the government’s loan guarantee program.

Lowering Dependence on Foreign Oil

Both Chu, in the Senate hearing, and Jackson, in a hearing of the House Energy and Commerce Committee, also discussed fuel efficiency and lowering the transportation sector’s need for imported oil.

A briefing memo released by the House committee lays out the problem, both in cost and national security:

"The U.S. relies on petroleum to supply 96% of the fuel for its transport sector, and 37% of the energy for the overall economy. As a result, the U.S. economy spent roughly $900 billion on petroleum products in 2008.

Because the U.S. contains only 2% of the world’s oil reserves, yet consumes nearly 25% of oil production, the U.S. has increasingly relied on imports, which supplied 57% of U.S. oil demand in 2008.

As a result, the U.S. sent roughly $440 billion overseas to pay for imported oil and petroleum products in 2008 — almost double the roughly $268 billion U.S. trade deficit with China. These costs do not include the money spent to secure oil shipping routes, fund tax cuts for oil exploration, or pay for the environmental and health impacts of oil consumption."

Three pivotal events over the past year have pointed the country in the direction of reducing that demand, Jackson said, listing the endangerment finding, President Obama’s agreement with the automakers to increase fuel efficiency and set tailpipe emission standards, and the federal renewable fuel standard that will shift the U.S. to greater use of biofuels.

Electric cars are on the cusp of becoming a key part of that low-carbon shift, but until battery development and production can catch up, Chu pointed out that there are bridge technologies that are making major improvements in the current auto market: more efficient internal combustion engines, lighter weight materials and better rolling resistance of tires, as well as cleaner small diesels that can satisfy even California’s high standards.

Strategies for Low-Carbon Development

So, how to get there?

The administration’s public blitz on energy issues — following the Republican mantra of all-of-the-above energy but also highlighting regulatory moves it can take without Congress — follows the latest delay in efforts to write climate legislation in the Senate. The House-passed climate bill, centered on an economywide cap-and-trade system, has little support in the Senate, and Sens. John Kerry (D-Mass.) and Lindsey Graham’s (R-S.C.) effort to produce a bipartisan plan hit the skids when Graham objected to a plan to sudden plan to take up immigration reform first.

Nearly every economist believes that the most cost-effective strategy for lowering greenhouse gas emissions is to set a price on carbon, Phil Sharp, president of the non-partisan research group Resources for the Future, told the Senate committee.

Congress should consider three important elements, he said: develop a portfolio of options with high chances of success rather than gambling on one energy source; have serious independent reviews every four or five years to weed out the policies that aren’t working; and capitalize whenever possible on the competitive marketplace to drive innovation.

Lawmakers also need to remember that the federal deficit is going to become an increasing pressure point in the next three to five years, he warned. A carbon tax or cap-and-trade system could at least generate funding to reach those goals.

If the nation fails to respond aggressively, the energy system of the future will look much like the energy system of today, with only small improvements, added Robert Fri, a former EPA deputy administrator and former visiting scholar at Resources for the Future.

The transitions from wood to coal and coal to oil didn’t happen on their own. “There was a societal reason driving change in the system,” Fri said. “That societal reason today is going to look a lot like climate change and energy security.”

See also:

Obama’s Energy Plan: All of the Above — Including a Price on Carbon

Chu: DOE Taking Lead on Renewables, Looking for the Next Bell Labs

Obama Budget Erases Fossil Fuel Subsidies, Ramps Up Nuclear Spending